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Deutsche Shell Tanker Gesellschaft MBH v. Placid Refining Co.

decided as corrected: June 8, 1993.

DEUTSCHE SHELL TANKER GESELLSCHAFT MBH, PLAINTIFF-APPELLANT/ CROSS-APPELLEE,
v.
PLACID REFINING COMPANY, DEFENDANT-APPELLEE/ CROSS-APPELLANT.



Appeals from the United States District Court for the Eastern District of Louisiana. D.C. DOCKET NUMBER CA-86-5683 "J". JUDGE Patrick E. Carr

Before Politz, Chief Judge, Johnson and Jolly, Circuit Judges.

Author: Politz

POLITZ, Chief Judge:

This case involves a general average claim arising from the grounding of the tanker DIALA in the Mississippi River. Deutsche Shell Tanker-Gesellschaft mbH, the vessel owner, appeals the judgment in favor of the cargo owner, Placid Refining Company. Finding no reversible error, we affirm.

Background

In 1983 Deutsche Shell contracted to deliver a shipment of crude to Placid's refinery in Port Allen, Louisiana. The crude was transpsorted by the tanker DIALA which departed Sullom Voe, Scotland on May 21, 1983. The Atlantic crossing was uneventful. Upon reaching the Mississippi River the DIALA took on a compulsory Mississippi River pilot to guide the vessel upstream.

On June 5, in the Mississippi, the ship passed through shallow water and experienced a vibration after which its 10-centimeter radar picture failed. Captain Schtzel radioed Deutsche Shell's New Orleans agent, Lykes Bros., requesting service for the 10-cm radar and for the 3-cm radar which had a weak picture. Further upriver, the tanker encountered a squall during which its 3-cm radar unit also failed leaving the tanker without any operational radar.

Captain Schtzel was able to interswitch the two radar systems and establish a picture on the 3-cm display. The pilot, however, fearful that another radar failure would leave the tanker in the shipping lanes at night with no radar, and believing that Coast Guard regulations required the ship to have two operational radar units, refused to proceed and directed the ship to anchor.*fn1 The Mississippi River was at flood stage with a swift current. Before the second anchor took hold, the current caught the ship and swept her two miles downstream where she ran aground. After a week of extensive salvage efforts, the DIALA was refloated and delivered the oil to Placid's refinery.

Deutsche Shell brought suit against Placid asserting a claim under the general average clause of the shipping contract*fn2 to recover a portion of the costs of the salvage effort.*fn3 Placid denied the claim asserting that it did not own the cargo at the time of the grounding and that the proximate cause of the grounding was Deutsche Shell's failure to maintain the radar in proper working order.

The issue of liability was tried to the court which entered a take nothing judgment in favor of Placid.*fn4 The district court found that Deutsche Shell failed to prove that a general average act occurred and, even if such had occurred, Deutsche Shell's failure to exercise due diligence in maintaining the 3-cm radar was the proximate cause. The district court also found that Placid owned the cargo at the time of the grounding. Deutsche Shell timely appealed; Placid cross-appealed on the issue of cargo ownership.

Analysis

A standard "New Jason clause"*fn5 requires general average contribution even if the carrier is negligent, unless the carrier is responsible for the damage under the Carriage of Goods by Sea Act.*fn6 Under COGSA a carrier is held at fault for damage to the cargo caused by unseaworthiness resulting from "want of due diligence on the part of the carrier to make the ship seaworthy."*fn7

A general average claim such as the claim at bar requires a three step analysis. The vessel owner has the initial burden to establish a general average act and that there was a separate cargo owner at the time of the act. If the vessel owner meets this burden, the cargo owner may avoid liability by establishing that the vessel was unseaworthy at the start of the voyage and the unseaworthiness was the proximate cause of the general average act. Finally, if the cargo owner establishes unseaworthiness, the vessel owner may still succeed if it proves that it exercised due diligence to make the vessel seaworthy at the start of the voyage.*fn8

Deutsche Shell raises several issues on appeal. First, it contends that the district court erred as a matter of law in determining that there was no general average act because the pre-trial order did not list this as a contested issue of either fact or law. Deutsche Shell further contends that, based on the uncontested evidence presented at trial, the district court's determination that there was no peril and hence no general average act was clearly erroneous. Deutsche Shell also contends that the district court's determinations that it failed to exercise due diligence and that such failure was the proximate cause of the grounding were clearly erroneous. In the cross-appeal, Placid contends that the district court erred in finding that Placid owned the crude oil on board the DIALA at the time of the grounding, and furthermore that Deutsche Shell should be held liable under the Pennsylvania Rule.*fn9

The determinations regarding peril, due diligence, and proximate cause are findings of fact which are upheld on appeal unless clearly erroneous.*fn10 "A finding is clearly erroneous only if the appellate court is left with the definite and firm conviction that a mistake has been made."*fn11

I. The General Average Act

"There is a general average act when, and only when, any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for the common safety for the purpose of preserving from peril the property involved in a common maritime adventure."*fn12 The district court found that Deutsche Shell failed to prove that a general average act occurred because the tanker was not in peril.*fn13 Deutsche Shell argues that the district court erred in raising the issue of peril sua sponte because the issue ...


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